Q1Balance sheet preparation under Companies Act 2013
0 marks easy
On 31st March 2019, Gaurav Ltd. provides the following particulars with debit/credit entries including equity share capital, land & building, plant & machinery, stock, trade receivables, cash, loans, and trade payables. Additional information provided includes issued shares, debtor aging, asset costs, interest accrued, and non-scheduled bank balance. You are required to prepare the Balance Sheet of Gaurav Ltd. as on 31st March, 2019 as per Schedule III to the Companies Act, 2013.
Q2Managerial remuneration limits under Companies Act
0 marks easy
The following is the Draft Profit & Loss Account of Harsha Ltd. for the year ended 31st March, 20X1 with various expenses, depreciation, and provisions listed. Depreciation on fixed assets as per Schedule II of the Companies Act, 2013 was ₹ 28,76,725. You are required to calculate the maximum limits of the managerial remuneration as per Companies Act, 2013.
Q3Cash flow statement using indirect method
0 marks easy
The following figures have been extracted from the books of X Limited for the year ended 31.3.2019. Net profit before tax after various adjustments was ₹ 20 lakhs with depreciation, discount on debentures, interest, investments, and income from law suits specified. Additional information includes income tax paid, preference share redemption, equity share issuance, land purchase consideration, dividend payments, and changes in current assets and liabilities. You are required to prepare a cash flow statement as per AS 3 using indirect method.
Q4Pre and post-incorporation profit allocation
0 marks easy
The partners of Shri Enterprises decided to convert the partnership firm into a Private Limited Company Shreya (P) Ltd. with effect from 1st January, 2018. The company was incorporated on 1st June, 2018. The business continued on behalf of the company with purchase consideration of ₹ 6,00,000 settled with 12% interest per annum. A loan of ₹ 9,00,000 was availed at 10% per annum. The first year ended 31st March, 2019 showing sales, cost of goods sold, various expenses, and profit of ₹ 1,72,800. Sales pattern changed significantly across pre and post-incorporation periods, and salaries doubled from July 2018. You are required to prepare a Profit and Loss Account showing apportionment of cost and revenue between pre-incorporation and post-incorporation periods.
Q5Share split, preference redemption, and bonus issue accounti
0 marks easy
The following is the summarised Balance Sheet of Bumbum Limited as at 31st March, 2019, showing authorized capital, issued capital, reserves and surplus, trade payables, and application of funds including PPE, investments, and current assets. In the Annual General Meeting held on 20th June, 2019, resolutions were passed for: (i) Equity share split from ₹ 10 to ₹ 2 each, (ii) Preference share redemption at 5% premium, and (iii) Bonus issue in ratio of 1:3. Investments were sold on 10th July, 2019 for ₹ 5,55,000 and preference shares were redeemed. Bonus issue was concluded by 12th September, 2019. You are required to journalize all transactions including cash transactions and prepare Balance Sheet as at 30th September, 2019.
Q6Rights issue valuation and ex-right price
0 marks easy
Zeta Ltd. has decided to increase its existing share capital by making rights issue to its existing shareholders. Zeta Ltd. is offering one new share for every two shares held by the shareholder. The market value of the share is ₹ 360 and the company is offering one share of ₹ 180 each. Calculate the value of a right. What should be the ex-right market price of a share?
Q7Preference share redemption with fresh equity issue
0 marks easy
The capital structure of Chand Ltd. consists of 20,000 Equity Shares of ₹ 10 each fully paid up and 1,000 8% Redeemable Preference Shares of ₹ 100 each fully paid up issued on 1.4.20X1. Undistributed reserve and surplus consist of General Reserve ₹ 80,000, Profit and Loss Account ₹ 20,000, and Investment Allowance Reserve ₹ 10,000 (of which ₹ 5,000 is not free for distribution). Cash at bank is ₹ 98,000. Preference shares are to be redeemed at 10% premium. Directors are empowered to make fresh equity issue at par after utilizing reserves, retaining minimum ₹ 20,000 in general reserve. You are required to pass Journal Entries and show how relevant items will appear in the Balance Sheet after redemption.
Q8Debenture redemption reserve accounting
0 marks easy
The following balances appeared in the books of Lakshya Ltd. as on 1-4-20X1: 10% Debentures ₹ 37,50,000; Balance of DRR ₹ 1,25,000; and DRR Investment ₹ 5,62,500 represented by 10% Secured Bonds of Government of India (5,625 bonds of ₹ 100 each). Annual contribution to DRR was made on 31st March every year. On 31-3-20X2, bank balance was ₹ 37,50,000 before interest receipt. Interest on debentures had been paid. Investments were realized at par for debenture redemption at 10% premium. Lakshya Ltd. is an unlisted company (other than AIFI, Banking company, NBFC and HFC). You are required to prepare Debenture Redemption Reserve Account, Debenture Redemption Reserve Investment Account and Bank Account for the year ended 31st March, 20X2.
Q9Investment account with bonus issue and rights issue
0 marks easy
Meera carried out the following transactions in shares of Kumar Ltd.: (1) On 1st April 2019 purchased 40,000 equity shares of ₹ 1 each fully paid for ₹ 60,000. (2) On 15th May 2019 sold 8,000 shares for ₹ 15,200. (3) On 15th June 2019, the company decided: (i) Bonus issue of 1 fully paid share for every 4 shares held on 1st June 2019, and (ii) Right issue of 1 share for every 5 shares at ₹ 1.50 per share with payment in two installments. Meera received bonus shares, took up 4,000 shares under right issue, sold remaining rights at 40 paise per share (proceeds received 30th September 2019). On 15th March 2020 received 15% interim dividend. On 30th March 2020 sold 20,000 shares for ₹ 28,000. You are required to record these transactions in the Investment Account for the year ended 31st March 2020, transferring profits/losses to Profit and Loss account using average cost basis.
Q10Loss of profit insurance policy calculation
0 marks easy
A trader intends to take a loss of profit policy with indemnity period of 6 months, but cannot decide the policy amount. From the following details, suggest the policy amount: Turnover in last financial year ₹ 36,00,000; Standing charges ₹ 7,20,000; Net profit was 10% of turnover and same trend expected in subsequent year; Increase in turnover expected 25%; Additional expenditure to achieve additional sales ₹ 50,000.
Q11Hire purchase and departmental accounting
0 marks easy
On January 1, 20X1 Kasturi Ltd. acquired a Pick-up Van on hire purchase from Shorya Ltd. The terms of the contract are: (a) Cash price of van ₹ 25,000; (b) ₹ 10,000 payable on signing contract; (c) Balance payable in annual installments of ₹ 5,000 plus interest; (d) Interest on outstanding balance 6% p.a.; (e) Depreciation 10% p.a. using straight-line method. You are required to show the Van account and Shorya Ltd. account in the books of Kasturi Ltd. from January 1, 20X1 to December 31, 20X3.
Q12Branch accounting and final accounts
0 marks easy
On 31st March, 2019 Chennai Branch submits Trial Balance to Head Office at Lucknow showing various accounts including furniture, depreciation, salaries, rent, advertising, stock, goods received from head office, debtors, cash, and head office account. Total balances ₹ 448 lacs. Additional information: Closing stock ₹ 62 lacs; Goods costing ₹ 10 lacs dispatched 29th March not received before 1st April; Head Office charged ₹ 1 lac for centralized services not recorded by branch. You are required to: (i) Pass Journal Entries in the books of the Branch to make necessary adjustments, and (ii) Prepare Final Accounts of the Branch including Balance Sheet.
Q13Accounts from incomplete records
0 marks easy
The books of account of Mr. Maan of Mumbai show the following figures as on 31.3.2018 and 31.3.2019: Furniture & fixtures, Stock, Debtors, Cash, Creditors, Bills payable, and Outstanding salaries. Cash book analysis reveals: Cash sales ₹ 16,20,000; Collection from debtors ₹ 10,58,000; Discount allowed ₹ 20,000; Cash purchases ₹ 6,15,000; Payment to creditors ₹ 9,73,000; Discount received ₹ 32,000; Payment for bills ₹ 4,30,000; Drawings ₹ 1,20,000; Salaries paid ₹ 2,36,000; Rent paid ₹ 1,32,000; Sundry expenses ₹ 81,000. Depreciation on furniture at 10% p.a. on diminishing balance. Gross profit rate maintained at 25% on sales. You are required to prepare Trading and Profit and Loss account for the year ended 31st March, 2019 and Balance Sheet as on that date.
Q14Asset impairment and onerous contracts
0 marks easy
A Ltd. has entered into a binding agreement with Gamma Ltd. to buy a custom-made machine for ₹ 1,00,000. At the end of 20X1-X2, before delivery of the machine, A Ltd. had to change its method of production. The new method will not require the machine ordered and it will be scrapped after delivery with expected scrap value nil. You are required to advise the accounting treatment and give necessary journal entry in the year 20X1-X2.
Q15Change in accounting policies and fundamental assumptions
0 marks easy
AS 1 Disclosure of Accounting Policies
Q16Inventory valuation and cash flow classification
0 marks easy
AS 2 Valuation of Inventories
Q17PPE recognition, depreciation, and capitalization policy
0 marks easy
AS 10 Property, Plant and Equipment
Q18Foreign exchange gains/losses and forward contracts
0 marks easy
AS 11 The Effects of Changes in Foreign Exchange Rates
Q19Government grants and investment reclassification
0 marks easy
AS 12 Accounting for Government Grants and AS 13 Accounting for Investments
Q20Capitalization of borrowing costs for qualifying assets
0 marks easy
AS 16 Borrowing Costs. Govind Ltd. issued 12% secured debentures of ₹ 100 Lakhs on 01.04.2018 to be utilized for: Construction of factory building ₹ 40 Lakhs; Purchase of Machinery ₹ 35 Lakhs; Working Capital ₹ 25 Lakhs. In March 2019, factory construction was completed and machinery installed and ready for use. Total interest on debentures for year ended 31.03.2019 was ₹ 12,00,000. During the year, company invested idle fund from debenture proceeds in fixed deposits and earned interest of ₹ 3,00,000. You are required to show the treatment of interest under Accounting Standard 16 and explain nature of assets.